For U.S. farm exports: Former secretary sees new potential

Clayton Yeutter had to call on all the skills he's developed as a secretary of agriculture, a U.S. trade representative and a law firm counsel to come up with some good news about the state of the farm economy.

But he succeeded in that effort as keynote speaker at the recent U.S. Grains Council annual meeting in Dallas.

But his optimism was couched in a substantial cloak of caution.

“What goes down, comes back up,” Yeutter said. “Agriculture is a cyclical industry and we have probably bottomed out. Prospects for the ag economy as a whole are improving.”

He said the tendency has been to “look at the cup as half empty. Don't do that. It's usually half full with the potential to get more full as time goes by.”

Adding to the contents of that cup is international trade, Yeutter said. “The Japanese market has been down but, in time, the Japanese will get their act together. There is too much talent in that country not to, and Japan will grow as an attractive market for American products. Japan will bring headaches with trade issues but will be a great customer.”

For some of the most promising customers, Yeutter recommends looking closer home. “Take care of your neighbors,” he said. “Canada and Mexico are both competitors and customers. The potential in Mexico is gigantic. A population of 100 million is gaining affluence and will provide a good market for U.S. farmers.

“U.S. agriculture has to be in the market in international trade. The world has wanted the United States to lead in trade. We're beginning to do that.”

He said the North American Free Trade Agreement (NAFTA) has “more achievements than most realize.”

Yeutter said China trade presents both opportunities and challenges. “We may have unreasonable expectations because China trade will not be a panacea for all our export ills. We will see some problems and competition.”

He said India bears watching as the population increases, the economy improves and citizens demand better nutrition. “It's just a matter of time until India markets open up.”

Changes in the Russian political scene may lead to better trade potential as well. “With Putin in office, the situation is changing. In the past, the risk was too great, but long-term potential is promising.”

Challenges remain, including trade sanctions and tariffs.

“We have to handle sanctions properly. That is improving some with exemptions on food and medicines in some countries. We still see a reluctance to buy in some cases. We must stop unilateral economic sanctions as well as some multi-lateral actions. We usually shoot ourselves in the foot with trade sanctions and often hurt ourselves more than we hurt the other guy.”

Yeutter said the bad guys, including Cuba, Iran, Iraq and North Korea offer substantial market opportunities when “they have leadership changes. Vietnam also is a potential market.”

Yeutter said the top priority in trade negotiations must be market access. “The United States is in a good position to knock down tariffs,” he said. “The average U.S. tariff is 12 percent; the average for the rest of the world is 60 percent. We have to work on that in trade negotiations.”

He said U.S. trade negotiators also must prevent traders from “nibbling away at phyto-sanitary regulations.”

Yeutter said U.S. farmers should re-define their product. “They sell nutrition, not just food.” He questions the benefit of touting the U.S. food supply as the most economical in the world and says consumers have their priorities in the wrong place.

“What's so great about having the cheapest food supply? Why is it better to spend money on BMWs and Mercedes Benzes than on food? I would not challenge the fundamental issue of providing economical food, but we do need to increase our attention on the value of nutrition.”

Yeutter said American agriculture remains “fundamentally healthy. “We're ready to benefit when the economy turns around.”